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Is a Put System Right for Your Organization?

December 18, 2014

By Tompkins International StaffPut System

Competition among retailers is rising. Delivery is getting faster. Customer expectations are surging.

What do all of these factors lead to? Organizations across all verticals are looking to cut warehousing costs while maintaining a high level of order accuracy—which is an (understandably) difficult juggling act.

The best way to cut costs while keeping strong order accuracy is to choose the right technology to drive your organization forward. We face so many complexities today, from the presence of multichannel, to seemingly endless new technologies. It can be difficult to navigate your way toward the best solution.

Consider Tompkins’ newest paper your “roadmap” for facing this challenge. Put Systems: How a Put System in Your Distribution and Fulfillment Operations Can Overcome Key Challenges explores the advantages of implementing a put system and can help you decide whether it is right for your operation.

Put systems are an innovative and smart solution compared to the cost and complications of a full sorter. They are a game-changing solution for retail store fulfillment, promotions/flash sales, multichannel operations, high growth operations, and operations that are highly volatile. Consider some of the top benefits of a put system:

  • Exceptional order accuracy
  • Improved labor management
  • Reduced training requirements
  • Time phased investments

It all comes down to developing processes and operations that are flexible enough to effectively meet all of the requirements to deliver personalized logistics. Download the paper to learn more about put systems and start thinking about the best way to ensure a multichannel operational design that can meet—and exceed—your customers’ expectations.

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Exciting Announcement About The Alibaba Effect

December 17, 2014

By Jim Tompkins
CEO, Tompkins International

We have an exciting announcement here at Tompkins International: The Alibaba Effect video has surpassed 100,000+ views on YouTube! This is a huge milestone for Tompkins, and it’s something we’re really proud of. But more important than video views is the hundreds of companies that have transformed their strategy and their supply chains as a result to achieve great success.

Join us in celebrating and check out the fun comic strip below on the video. We hope you enjoy it and we wish you a happy holiday from the Tompkins International team. Exciting times are ahead in 2015!

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The Alibaba Effect Video

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Selecting the “Right” Carrier/Partner to Handle Your Shipments

December 15, 2014

By Tony Nuzio – Guest Blogger
Founder/CEO, ICC Logistics Services, Inc.Selecting the “Right” Carrier/Partner to Handle Your Shipments

In today’s very competitive transportation environment, the decision to select the right carrier/partner to handle your company’s shipments should be much more than a financial decision.  Yet, in many companies the “assumed” bottom line is usually the decision maker.

Price vs. Service – is there a trade off?  Should there be?  We think not!  In fact the primary selection criteria should not involve price but rather servicing capabilities.  This is not to say that price is not important, it just should not be the primary selection criteria.  You see, if the carrier cannot meet a shipper’s service needs, what difference will the price make?

So, how should carriers be selected to handle a company’s shipments?  We have some thoughts.

The first issue to address is to seek out long term and mutually beneficial business relationships.  It should never be “we win, you lose.”  And yet we consistently see from both sides of the fence, shippers and carriers alike, where one party is seeking to gain “power” over the other to control the relationship.  These types of relationships usually do not last very long.

Take a recent example where a parcel carrier insisted that their customer continue to pay excessive declared value fees for their shipments from the carrier.  When the shipper challenged the carrier that they could significantly reduce these costs by obtaining a cargo loss policy from their own insurance company, the local sales representative insisted that was not a good idea.  He contended that when a shipper purchases the insurance from the carrier the carrier does a better job of monitoring the shipper’s packages.  So, does that mean that if the shipment is not insured, the carrier does not take the same care in handling a shipper’s packages?  An absurd approach to a business relationship!

How about the shipper that attempts to convince its carriers that they are true business partners, but each year re- bids his business to obtain the lowest possible rate.  Certainly there is no real partnership here.

So, what other considerations should shippers and carriers take into account when seeking to do business together?

  • Since carriers must continue to invest in new equipment and technology, they certainly need to make a profit. The question is how much of a profit is the shipper willing to have them make on their business?
  • Shippers and carriers should be willing to do business together on an “open-book” basis. That means sharing comprehensive and sometimes confidential data with each other as any true business partners would.
  • Shippers need to provide comprehensive and exact shipping requirements to their freight carriers so that there will be no surprises once they begin to do business together.
  • Shippers and carriers must be willing to drive down costs together. When there is an honest and open line of communication between both parties there should be an ability for both parties to understand cost drivers and to examine opportunities to reduce those costs.
  • Establish “No-Fault” communications. Shippers and carriers should work together to solve problems rather than pointing a finger at each other.  True and successful, long term business relationships never involve finger pointing.
  • Perform on-going measurement. In real estate it’s always location, location, location.  To create successful carrier/shipper partnerships its due diligence, trust and on-going measurement to make sure all is going as planned.

Both sides in the carrier/shipper partnership should consistently seek out ways to be a better customer or service provider.  In business meetings at Amazon there is always an empty chair in the room, representing their customer.  What a great way to ensure you never lose sight of the importance of the customer.  What’s your company doing to strengthen its relationship with its customers and business partners?

Please take a moment to check out ICC’s Blog @ http://www.logisticsstrategies.com.

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Reprinted from ICC Logistics Services, Inc. with permission.
Photo credit: www.graphicstock.com

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Alibaba is an Opportunity (Not a Threat) for U.S. Retailers

December 9, 2014

By Jim Tompkins
CEO, Tompkins International

Update (December 11, 2014): USA Today published a column yesterday written by small business owner Rex Solomon. The column, “Local Retailers Face New China Threat,” depicts Alibaba as an online retailer and major enemy to American “Main Street” businesses. As I previously discussed in my blog post below, Alibaba is not a retailer or the enemy. Alibaba will flourish in the U.S. with or without tax benefits from Congress. The column discusses Alibaba as if it has not yet arrived on U.S. soil—but you and I both know this is not true. Alibaba.com has been in the U.S. since 1999, and it has been making key investments since 2009 and growing the 11 Main marketplace. Therefore, while I agree with the author’s stance that Congress needs to address tax incentives for online retailers, we need to remember that Alibaba is not the “bad guy” in this discussion. In fact, Alibaba isn’t even related to the discussion of online retail tax incentives at all. Alibaba is an online marketplace, not a retailer.

Alibaba is an Opportunity Not a Threat for US RetailersThis month a series of videos and ads hit the airwaves and the Internet from a group calling itself “The Alliance for Main Street Fairness.” The ads are meant to pressure Congress into passing the Marketplace Fairness Act, which would end sales tax exemptions for online retailers. The group is using scare tactics about a “foreign invader” (i.e., Alibaba), who will “destroy” main street businesses across America, to move lawmakers to action.

Let’s be clear about who is behind this effort. It is NOT an alliance of small and mid-sized “main street” retailers. The truth is that it is a lobbying group fronted by FP1 Strategies, a political consulting firm, and funded by many mega-retailers. There is nothing Main Street about this campaign.

Its efforts to date have been less than successful, so it is now turning to nationalism, protectionism, and xenophobia to move the ball forward.

Previously Amazon, eBay, and other major U.S. e-commerce companies were its targets and illustrated as the villains—to largely no effect. This new campaign inserts China as the threat (with Alibaba as the proxy).

In our ongoing effort to educate U.S. retailers and brands about what Alibaba is and to shed light on the opportunity it represents, I offer these points regarding this story:

  1. Contrary to the Alliance pronouncements Alibaba is NOT a retailer. Alibaba provides platforms for retailers and brands to sell to customers primarily in China (i.e., Tmall for big companies and Taobao for individuals and small businesses) and secondarily to more than 200 other countries, including the U.S. But Alibaba does not sell anything—it is a pure marketplace. It makes its money only via fees and advertising.
  2. Alibaba provides opportunities for U.S. retailers to connect with new customers overseas and opportunities for U.S. customers to connect with companies from around the world. But, again, Alibaba does not sell anything.
  3. Alibaba has no immediate plans to enter the U.S. as a retailer, or to compete with retailers.
  4. It is ridiculous to believe that U.S. retailers, under the banner of “fairness,” would use Alibaba as a scare tactic for domestic legislation. After all, Alibaba is not even in the market, and the Alliances real targets are online retailers.
  5. Retailers need to remember that omnichannel sales and omnichannel supply chains are the key to success. The Alliance needs to get on with pursuing its tax agenda with more integrity and its omnichannel evolution. It needs to stop viewing brick-and-mortar and online as competitive channels.
  6. Demonizing Alibaba as an online retailer risks alienating 1 billion Chinese speaking consumers in China and around the world. This is not a good position to take as China becomes the largest economy on Earth.

The misunderstanding and disinformation propagated about Alibaba and online retail in general by retailers indicates that many of them still do not understand the role of retail in a globalized marketplace.

Borderless e-commerce will be the defining opportunity of the next five years. I encourage retailers to seek ways to profit from Alibaba, not demonize it. A good starting place is to watch The Alibaba Effect video.

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Is Alibaba the Global Farmers Market?

December 4, 2014

By Jim Tompkinsglobal farmers market
CEO, Tompkins International

A week after Alibaba’s mid-September IPO, Jin Jianhang (Alibaba Group President) said: “Business-customer e-commerce in the agriculture sector, along with big data and cross-border e-commerce, will be the company’s main business focuses after the stock market listing.”

Mr. Jianhang also explained Alibaba’s commitment to establishing a dedicated agriculture platform on Taobao.com for farmers to sell products. They could enjoy services including marketing and logistics support, as well as product tracing.  These comments are of significant interest to all consumers, farmers, and grocery businesses even though they are not new thoughts coming from Alibaba. In fact, they are a continuation of many of Alibaba’s philosophies and actions in the past few years:

  • Alibaba’s philosophy of helping small business in China.
  • Alibaba’s focus on cross-border trade: China to the world and the world to China.
  • The growth of the Alibaba cold chain agri-food business that has grown 18 times from 2010 to 2014. It will be greater than $13 billion in 2014.
  • Alibaba is harnessing the desires of the fast-growing middle and upper classes; they are hungry and thirsty for delicious agricultural products. (See the new book China’s Super Consumers by Michael Zakkour to learn more.)
  • The evolution of Alibaba’s interest to expand upon its online grocery business.  Two interesting facts here:
    • My search on Alibaba.com for “Sell Fruit” yielded 4,764 suppliers. These suppliers were 72% East Asia, 6% South Asia, 6% Southeast Asia, 2% North America, and 14% other. The markets included 3,612 wholesalers in North America, 3,502 in Western Europe, 3,373 in Eastern Europe, 3,302 in South America, and many more throughout the world.
    • Alibaba’s Taobao grocery business continues rapid growth in both “center-of-the-store” pantry items and “outer ring” cold chain items. Add to this the prediction made in the video The Alibaba Effect that Alibaba will be entering the U.S. online grocery business over the next two years, and the importance of the role Alibaba plays in the global food chain is clear.

Online grocery in the U.S. today is only 3.5% or about $23 billion per year. Over the next 5 years, I believe this number will surge to more than $100 billion. Alibaba has good experience in this sector in China and has a good start working with suppliers, plus a strong desire to pursue the U.S. market.

So, is Alibaba the global farmers market? I’m not convinced yet, but stay tuned. I do know that Alibaba will soon have a substantial outreach in filling your pantry, refrigerator, and freezer in the years to come.

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Michael Zakkour Talks “Top Gear” TV Show in China

December 3, 2014
Top Gear TV Show

www.bbcamerica.com/top-gear

By Tompkins International Staff

Ever watched the British television show “Top Gear”? If you haven’t, you are missing quite the party.  The show is hosted by three presenters who offer a humorous, quirky, but factual dialogue about motor vehicles of all shapes and sizes.

In the past few years, the “Top Gear” show platform has spread to other countries, including the United States, Russia, and Australia. The BBC recently announced that it has signed a deal to produce a local version of the car series in China. The first episode premiered in November of this year and is hosted by three Chinese celebrities.

Michael Zakkour, a principal at Tompkins International and author of China’s Super Consumers, recently spoke with the BBC about the motoring show debuting in China. Watch the video below and learn how Chinese consumers who love cars and foreign entertainment will make “Top Gear” a huge entertainment success in the region.

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Retail E-Commerce: Don’t Get Your Head Buried in the Sand

December 2, 2014

By Jim TompkinsRetail E-Commerce
CEO, Tompkins International

Would you be surprised if I told you there are still many who are in denial about the reality of retail transformation? There are business leaders with their heads buried in the sand, refusing to accept and understand that retail and shopping are forever changed. What is most interesting is that many North Americans are those that are in denial. The U.S., Canada, and Mexico are all very different, but they all have their “retail heads” equally buried in the sand:

  • United States: A recent Businessweek article argued that Singles Day will not catch hold in the U.S. because 1) November 11 is already Veterans Day, 2) There is not room between back-to-school sales and holiday sales for even more sales, and 3) We already have enough U.S. holidays. But I disagree with all three of these arguments. I am a proud U.S. Army veteran, but that does not occupy my entire November 11. Also, most Black Friday Sales, Thanksgiving Sales—and yes, even Cyber Monday Sales—begin in early November. I think November 11 would be a smart U.S. sales date because it is roughly 90 days after back-to-school sales and 45 days from December 25. In addition, the Alibaba Group 11.11 Shopping Festival is not considered a holiday or an official day off work.  
  • Canada:  Last week I wrote a blog post about Alibaba in Canada and how the Canadian Prime Minister met with Alibaba’s founder Jack Ma to discuss the possibility of selling Canadian agricultural products to China. This resulted in very little feedback, with some even focusing on why Canada would want to “have a relationship with a Communist country.” (Sigh.)
  • Mexico: In discussions with several business leaders in Mexico, I was told e-commerce in China is not and will not be relevant because most Mexicans do not have credit cards and logistics for e-commerce delivery in Mexico is difficult. But that would mean Alibaba could never have been successful in China because fewer Chinese people had credit cards in China than in Mexico, and the logistics for e-commerce delivery in China was impossible. Some leaders in Mexico are clearly overlooking an important opportunity.

Overall, the U.S. is in denial about the huge success of Alibaba and its implications on cross-border trade. To learn more about Alibaba, you need to see the The Alibaba Effect video. Next there is Canada, who is in denial about Chinese consumers and the unlimited potential for Canadian farmers to sell agricultural products to China. To learn more about China’s consumers, read the new book China’s Super Consumers. Finally, Mexico is in denial about the challenges Jack Ma faced when he began Alibaba in China. Jack has not only overcome these challenges, but he has created what will become the world’s largest retail platform in 2015.

Alibaba’s IPO this past September was the largest in the history of business and its goal is cross-border trade. China is the fastest growing economy in the world, and is in close competition with the U.S. to become the largest economy in the world. Plus, Alibaba took in $9.3 billion of retail sales on Singles Day this year.

E-commerce and omnichannel retail will change the world and the supply chains of the world. If your head has been in the sand, don’t worry—you’re not alone. Go ahead and pull your head out, comb the sand out of our hair, and embrace the largest business transformation of all time.

Photo credit: www.graphicstock.com

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Alibaba: The Farmers Market for Canada and Friend to the Canadian Consumer

November 24, 2014

Alibaba The Farmers Market for CanadaBy Jim Tompkins
CEO, Tompkins International

A week after the Alibaba mid-September IPO, Alibaba Group President Jin Jianhang said, “Business-customer e-commerce in the agriculture sector, along with big data and cross-border e-commerce, will be the company’s main business focuses after the stock market listing.”

He also explained Alibaba’s commitment to developing a dedicated agriculture platform on Taobao.com that farmers can sell products on. It will also offer additional services such as marketing and logistics support, and product tracing.

These comments are important to Canadian farmers, even though they are not new thoughts coming from Alibaba. In fact, Alibaba has already been committed to expanding its presence in Canada:

  • Alibaba has a long-standing philosophy of helping small business in China.
  • Alibaba’s focus on cross-border trade, both from China to the world, and the world to China.
  • Alibaba’s cold chain agri-food business has grown 18 times from 2010 to 2014, and it will be greater than $13 billion in 2014.
  • Alibaba is harnessing the desires of the fast-growing middle and upper classes that are hungry and thirsty for delicious agricultural products. (For more on this, read the new book China’s Super Consumers by Michael Zakkour.)

A month after Mr. Jianhang’s comments, a delegation from Canada’s most populous province met with Alibaba in Shanghai. Brad Duguid, the Economic Development Minister out of Ontario, and Michael Chan (International Trade Minister) brought a surprise guest to the Alibaba meeting: Premier Kathleen Wynne.  

As a result of this meeting, Alibaba can export a variety of Canadian products to China, including cranberries, corn, pork, beef, poultry, wine, and more. Due to Canada’s high quality of produce and high food safety standards, the “Made in Canada” label is valued and works well for the China market—and therefore for Alibaba.

In addition to Canadian farmers being suppliers to China, Canadian customers now have an ally in China. Contrary to many other retailers and retail platforms, Alibaba understands that Canada, Mexico, and the United States are three unique countries. Alibaba gets this better than most because it recognizes that China is not one marketplace, but rather comprised of 22 distinct market clusters. The number of Alibaba’s Canadian customers presently sits at 1 million, but this number too will grow.

What does all of this mean? Canadian suppliers and consumers have a huge opportunity to increase their interactions with Alibaba. Watch The Alibaba Effect video for a background on these increased interactions and understanding Alibaba. Learning how to leverage the power of Alibaba for both Canadian suppliers and consumers is a big deal. For Canadian farmers, it is clear that Alibaba is the door to China’s farmers market—the largest marketplace in the world. For Canadian consumers, not only is Alibaba the doorway into China (i.e., “the factory of the world”) but also the doorway into cross-border trade.

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10 Facts You Didn’t Know about China’s Super Consumers

November 11, 2014

10 Facts You Didn’t Know about China’s Super Consumers By Tompkins International Staff

China’s super consumers are the biggest and most important consumer class in history. In his new book China’s Super Consumers: What 1 Billion Customers Want and How to Sell it to Them, Tompkins International Principal Michael Zakkour explores the extraordinary birth of consumerism in China and explains who these super consumers are. Take a look at 10 interesting insights from the book:

  1. No matter what products or services you are selling, you cannot succeed in China or with Chinese consumers without first mastering culture, history, language, and philosophy.
  2. There is no “how to succeed in China” formula. Every company must start with the above to determine strategy, then implement structure and adjust every six months.
  3. China is not a “market,” but rather it is comprised of 22 distinct market clusters. The old model of marketing to Tier I, Tier II, and Tier III cities no longer applies.
  4. China has the second highest number of billionaires, only surpassed by the US. It also boasts 2 million millionaires and the world’s largest middle class at 350 million (will grow to 500 million in the next 5-10 years).
  5. China went from Sandpaper to Sephora and Feudalism to FENDI in 30 years. Consider this: in the late 1970s, Chinese women used sandpaper on their faces because there was no makeup. French cosmetics retailer Sephora now has more than 250 outlets in China. 
  6. There is now a “China Global Consumer Demographic.” Companies must have a “China-US-World” strategy to engage them everywhere, not just in China.
  7. China has more e-shoppers (400 million) than the US has people (320 million).
  8. Alibaba, the world’s largest e-commerce company, generated $100 billion more in revenue than the second and third largest e-commerce companies (Amazon and eBay) combined in 2013. (Click here to watch The Alibaba Effect)
  9. The Chinese are thirsty—they drink more beer and wine than any country on Earth and have made China Starbucks’ #2 market in the world.
  10. Companies must rethink their global, regional, and local supply chains for China as the country is now a market as well as a production hub.

Click here to order your copy and visit www.chinasuperconsumers.com to learn more.

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What’s the Big Deal: 9 Most Interesting Alibaba Facts

November 10, 2014

9 Most Interesting Alibaba FactsBy Tompkins International Staff

Alibaba made a big splash with its recent IPO and subsequent publicity. But that’s not the only reason this company is such a big deal. The more you learn about Alibaba and its leader Jack Ma, the more fascinating the story really is.

We’ve outlined nine of the most interesting facts about Alibaba, with more happening on a regular basis. Let’s check them out:

  1. Alibaba boasts 81% of online business in China, also known as the world’s largest e-commerce market.
  2. In 2014, Jim Tompkins estimates that U.S. e-commerce with reach $475B, China will be at $540B, and Alibaba will be at $450B. Alibaba alone will nearly equal all e-commerce in the U.S. in 2014.
  3. By 2020, we believe China’s e-commerce will be larger than that in the U.S., UK, Japan, Germany, and France combined. That is the power of China’s super consumer. Order your copy of Michael Zakkour’s new book, China’s Super Consumers, to find out why we think this will be true.
  4. We predict that Alibaba will be the world’s largest retail platform next year. Yes, bigger than Walmart.
  5. Alibaba is the fastest growing e-commerce company in the world in the fastest growing market. The company’s growth rate since 2003 has approached 120%/year and has grown at a rate of 70% between 2009 and 2013.
  6. In the 24 hours of “Singles Day” (11/11/2013), Alibaba handled $5.75B in sales. This was 80% more than 2012 and 3 times what U.S. retailers sold on Cyber Monday. Tompkins’ prediction for 2015 “Singles Day” is $8B in sales.
  7. Last year UPS and FedEx handled 5 billion packages. In China, Alibaba spurred the delivery of 5 billion packages.
  8. Alibaba is profitable with 2013 revenue of $8B–a profit of $3.6B for a profit margin of nearly 45%.
  9. Alibaba’s September 2014 IPO was the largest IPO in history.

Is Alibaba more than you thought it was before reading this blog? Keep the bigger picture in mind of how significant this company is to retail and e-commerce. To learn more, watch The Alibaba Effect video.

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Photo Credit: Andrew Burton Getty Images